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ValueVision Media Inc. Reports Operating Results (10-Q)

September 09, 2010 | About:
10qk

10qk

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ValueVision Media Inc. (VVTV) filed Quarterly Report for the period ended 2010-07-31.

Valuevision Media Inc. has a market cap of $64.4 million; its shares were traded at around $1.97 with and P/S ratio of 0.1.

Highlight of Business Operations:

Consolidated net sales for the fiscal 2010 second quarter were $126,177,000 compared to $119,345,000 for the fiscal 2009 second quarter, which represents a 6% increase. We reported an operating loss of ($6,237,000) and a net loss of ($7,693,000) for the fiscal 2010 second quarter. We reported an operating loss of ($10,769,000) and a net loss of ($8,235,000) for the fiscal 2009 second quarter.

Cost of sales (exclusive of depreciation and amortization) for the fiscal 2010 second quarter and fiscal 2009 second quarter was $79,021,000 and $77,785,000, respectively, an increase of $1,236,000, or 2%. Cost of sales (exclusive of depreciation and amortization) for the six months ended July 31, 2010 and for the comparable prior year period was $158,261,000 and $169,398,000, respectively, a decrease of $11,137,000, or 7%. The increase in second quarter cost of sales is directly attributable to increased costs associated with increased sales volume from our television home shopping and internet channels. Net sales less cost of sales (exclusive of depreciation and amortization) as a percentage of sales for the second quarters of fiscal 2010 and fiscal 2009 were 37.4% and 34.8%, respectively, a 260 basis point increase. Net sales less cost of sales (exclusive of depreciation and amortization) as a percentage of sales for the six months ended July 31, 2010 and the comparable prior year period were 37.0% and 33.1%, respectively, a 390 basis point increase. The increase in the gross margins experienced during the quarter and year-to-date periods was driven primarily by merchandise margin improvements targeted in a majority of our key product categories, increased shipping and handling margins resulting from fewer promotions and due to the impact of having a lower consumer electronics product mix during fiscal 2010.

$106,165,000 for the comparable prior year period, an increase of 2%. Distribution and selling expense increased $1,136,000, or 3%, to $45,021,000, or 36% of net sales during the fiscal 2010 second quarter compared to $43,885,000 or 37% of net sales for the comparable prior year fiscal quarter. Distribution and selling expense increased $1,939,000, or 2%, to $91,063,000, or 36% of net sales during the six months ended July 31, 2010 compared to $89,124,000 or 35% of net sales for the comparable prior year period. Distribution and selling expense increased on a year-to-date basis primarily due to a $2,272,000 increase in net cable and satellite fees as a result of increased homes and increased credit card fees of $693,000 due to increased order transactions, offset by decreases in advertising and promotion expense of $249,000; a decrease in third-party cable affiliation fees of $100,000; and decreases in bad debt expense of $701,000.

General and administrative expense for the fiscal 2010 second quarter increased $486,000, or 11%, to $4,795,000, or 3.8% of net sales, compared to $4,309,000, or 3.6% of net sales for the fiscal 2009 second quarter. General and administrative expense for the six months ended July 31, 2010 increased $626,000, or 7%, to $9,562,000 or 3.8% of net sales, compared to $8,936,000, or 3.5% of net sales for the comparable prior year period. General and administrative expense increased on a year-to-date basis over prior year primarily as a result of an increase in relocation expense associated with filling key positions and other salary related benefits totaling $627,000.

Depreciation and amortization expense for the fiscal 2010 second quarter was $3,527,000 compared to $3,427,000 for the fiscal 2009 second quarter, representing an increase of $100,000, or 3%, from the comparable prior year fiscal quarter period. Depreciation and amortization expense for the six months ended July 31, 2010 was $7,218,000 compared to $7,216,000 for the six month comparable period representing an increase of $2,000 from the comparable prior year period. Depreciation and amortization expense as a percentage of net sales for the three month periods ended July 31, 2010 and August 1, 2009 was 2.8% and 2.9%, respectively. Depreciation and amortization expense as a percentage of net sales for the six month periods ended July 31, 2010 and August 1, 2009 was 2.9%. The year-to-date increase in depreciation and amortization expense relates to the timing of fully depreciated assets year over year and increased depreciation and amortization as a result of assets placed in service in connection with our various application software development and functionality enhancements.

For the fiscal 2010 second quarter, we reported a net loss available to common shareholders of $(7,693,000) or $(.24) per common share on 32,703,000 weighted average common shares outstanding compared with a net loss available to common shareholders of $(8,235,000) or $(.26) per share on 32,273,000 weighted average common shares outstanding in the fiscal 2009 second quarter. For the six months ended July 31, 2010, we reported a net loss of $(18,664,000) or ($.57) per common share on 32,691,000 weighted average common shares outstanding compared with a reported net income available to common shareholders of $7,054,000 or $.22 per share on 32,688,000 weighted common shares outstanding ($.21 per share on 33,391,000 weighted diluted shares). Net loss available to common shareholders for the second quarter of fiscal 2010 includes interest expense of $2,095,000, relating primarily to interest on our Series B Preferred Stock and the amortization of fees paid on our bank line of credit facility, and interest income totaling $9,000 earned on our cash and investments. Net loss available to common shareholders for the second quarter of fiscal 2009 includes interest expense of $1,235,000 related to the Series B Preferred Stock, the recording of a pre-tax gain of $3,628,000 from the sale of investments and interest income totaling $146,000 earned on our cash and investments. Net loss available to common shareholders for the six months ended July 31, 2010 includes interest expense of $3,945,000, relating primarily to interest on our Series B Preferred Stock and the amortization of fees paid on our bank line of credit facility, and interest income totaling $51,000 earned on our cash and investments.

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